Institutional Presentation December 2008
AGENDA About Banco Daycoval Page 3 Our Business Model and the Crisis Page 4 Investment Agreement Page 7 Capital Structure and Funding Page 13 Our Products Page 16 Results Corp. Governance, Shareholders and DAYC4 Shares Annexes Page 25 Page 34 Page 36 2
About Banco Daycoval Traditional Bank, with more than 40 years of experience 1968 commencement of activities at Daycoval DTVM in Brazil Capital Structure reflecting the Bank s conservative approach Basel Index always above 20% High level of liquidity and low leverage Outstanding position in the financial market In 2007, Daycoval carried out the biggest IPO among the peers In 2009, Daycoval carried out a unique funding operation Several recognitions awarded Best middle market bank in the last 3 years 3
AGENDA About Banco Daycoval Our Business Model and the Crisis Investment Agreement Capital Structure and Funding Our Products Results Corp. Governance, Shareholders and DAYC4 Shares Annexes 4
Our Business Model and the Crisis Financial Strength Diversification of Funding Sources Assets and Liabilities Management Shareholders Equity and Cash Position Equity = R$ 1.6 bi (*) Cash = R$ 1.1 bi (*) Deposits Borrowings / Onlending Foreign Borrowings Matching volumes and duration among assets (406 days) and liabilities (428 days) (*) Crisis Effect: Maintenance of cash position and increase of the cash / deposits ratio Crisis Effect: Funding volume impacted in the first moment, recovering since November/08 Crisis Effect: Stable liquidity position, due to alignment between operations rates and maturities 5 (*) 12/31/2008
Our Business Model and the Crisis Focus on Value Added Products and Niches Strict Credit Policy Operational Excellence Middle Market and Retail (Payroll + Auto) Crisis Effect: Credit portfolio decline in line with funding and strengthen of SMEs and reduction of Auto origination Focus on relationship Flexibility in the development of the operation Agility in the making process decision Crisis Effect: Reinforcement in the monitoring / execution of the collaterals and realignment of operations rates, maturities and tickets Low fixed costs Rigorous internal controls Outstanding IT platform Crisis Effect: Promotion of organizational restructure and new efforts to diminish of variable costs 6
AGENDA About Banco Daycoval Business Model Investment Agreement Capital Structure and Funding Our Products Results Corp. Governance, Shareholders and DAYC4 Shares Annexes 7
The Investment Agreement Banco Daycoval has signed an Investment Agreement with the following institutional investors: CARTESIAN CAPITAL GROUP WOLFENSOHN CAPITAL PARTNERS INTERNATIONAL FINANCE CORPORATION IFC DAYCOVAL HOLDING FINANCEIRA S.A. Approximately Amount of the Transaction : R$410 million (this amount may be surpassed depending on investment by minority shareholders) The agreement has a pioneer structure and consists in a private offer of subscription bonds of shares, which permits to the investors to exercise its right immediately after the offer or in a future date by investment in Daycoval s CDBs issued up to five years term Minority shareholders may participate in the transaction on the same terms and conditions as the above mentioned institutional investors 8
Goals and Differentials of the Agreement Main Goals: To have a relevant role participation during the recovery of credit growth in Brazil To strengthen the funding base and thereby support expansion of the credit portfolio in the middle market segment To diversify funding sources and lengthen the average term structure To increase Daycoval s free float after conversion of the bonds into DAYC4 stock Main Differentials: Daycoval was approached by the investors with a proposal to proceed with the transaction, demonstrating the trust and credibility it has built up over 40 years A unique structure was designed for completion of the transaction The investors carried out a due diligence, confirming the quality of Daycoval s controls The controlling shareholder is participating in the transaction The transaction is priced at an premium over the current market price of Daycoval stock 9
Description of Investment Agreement Key features of subscription warrants: Each warrant confers the right to subscribe one share, common (ON) or preferred (PN), as appropriate Existing shareholder have thirty (30) days to exercise right of preference Initially the warrants will not be tradable on stock exchange or OTC market; however Daycoval will ask in the future for the registration to CVM, the Brazilian Securities & Exchange Commission and to BM&FBovespa Subscription may be exercised by advance notice every quarter after the second year at R$7.75 per share in the case of future exercise of warrants Key features of CDBs: Due Date: March 31, 2014 (5 years) Average Yield of 99% of CDI: 110% of CDI in first four years and 55% of CDI during the fifth year Quarterly yield will be incorporated during first two years into the value of the CDB, followed from Year 3 by quarterly distributions to investors Full or partial early redemption allowed only for conversion to equity (ON* or PN* shares) once exercise is allowed, from Year 3 or in certain redemption hypotheses foreseen in the investment agreement 10 (*) ON = Common Shares and PN = Preferred Shares
Dynamic of the Investment Agreement Banco Daycoval Minority Shareholders Bonds 18,451,613 ON (1) 76,996,117 PN (2) Bonds ON=1 share ON Bonds PN=1 share PN (1) Common (2) Preferred Existing shareholders have thirty (30) days to exercise right of preference Subscription Exercise 1 30 days from the date bonds are credited via cash payment for conversion into equity at R$7.30 per share Exercise 2 Investors buy CDBs issued by Banco Daycoval Subscription of shares in the third, fourth and fifth year following the date of bond issue, at R$7.75 per share Free float Institutionals Investors Controlling shareholder assign right of preference to institutional investors (15) Fifteen calendar days for financial Settlement with institutional investors R$400 million Investors buy CDBs issued by Banco Daycoval 11
AGENDA About Banco Daycoval Our Business Model and the Crisis Investment Agreement Capital Structure and Funding Our Products Results Corp. Governance, Shareholders and DAYC4 Shares Annexes 12
Capital Structure: Solidness and low leverage Shareholders Equity and Credit / Equity R$ MM Equity Credit / Equity times 2,000 4.0 1,600 1,200 800 400 0 1,518 1,563 1,597 1,612 1,607 2.3 2.5 2.8 2.9 2.2 4Q07 1Q08 2Q08 3Q08 4Q08 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 40% 30% 20% 10% Basel Index % 35.8% 33.1% 28.2% 25.6% 25.6% 4Q07 1Q08 2Q08 3Q08 4Q08 Solidness: the capital structure reflects the conservatism of the strategy adopted Low leverage: ratio Credit/Equity enable the Bank to play an active role in the recovery of the credit growth Capital adequacy: Basel Index always above 20%, overcoming the market s average 1,200 High capitalization: maintenance of cash reinforces the operations liquidity 0 900 600 300 Cash Evolution R$ MM 4Q07 1Q08 2Q08 3Q08 4Q08 13
Funding: In line with credit portfolio Total Funding - R$ MM Funding Breakdown December/08 2,977 3,165 3,858 3,975 3,273 22% Total Deposits 24% 54% Foreign Borrowings Borrowing and Onlending 4Q07 1Q08 2Q08 3Q08 4Q08 Deposits: with more than 700 clients, are the main source of funding, representing 54% of the total Low Exposure: only 20% of the deposits have liquidity and 38% are concentrated in the top 10 clients Maintenance of Liquidity: the ratio cash/total deposits always above 30%, reaching 65% at the end of 2008 4,000 3,000 2,000 1,000 0 Credit versus Funding R$ MM Credit portfolio Funding 2004 2005 2006 2007 2008 14
Funding: Match between assets and liabilities Average Term (calendar days) Average Term: maintenance of the positive gap between average term of deposits and middle market portfolio Match between Assets and Liabilities: the funding average term (428 days) is superior of credit portfolio average term (406 days) 350 300 250 200 150 100 Average Term Middle Market Average Term Time Deposits 4Q07 1Q08 2Q08 3Q08 4Q08 By maturity (Credit Portfolio) 4Q08 % By maturity (Funding) 4Q08 % 5% 1% 39% Up to 3 months 4% 4% 27% No maturity 25% From 3 to 12 months From 1 to 3 years Up to 3 months From 3 to 12 months 30% From 3 to 5 years Above 5 years 39% 26% From 1 to 3 years From 3 to 5 years 15
Ratings Agencies Ratings Outlook Published Global Scale Counterparty Rating Long Term BB- Short Term B National Scale Counterparty Rating Long Term bra Short Term bra-2 Stable Stable November 2008 Global Scale Foreign Currency Long Term BB- Short Term B National Scale Long Term A (bra) Short Term F1 (bra) National Scale Long Term AA- Short Term A-1 Low Risk mid-term Index 10.22 Global Scale Local Currency Long Term BB- Short Term B Stable October 2008 Stable Stable April 2008 No Alert Gaps October 2008 16
AGENDA About Banco Daycoval Our Business Model and the Crisis Investment Agreement Capital Structure and Funding Our Products Results Corp. Governance, Shareholders and DAYC4 Shares Annexes 17
Our Products: clear strategy Daycoval has focus on its business, playing by branches which of cover Brazilian territory overall Middle Market Working Capital Trade Finance Receivables, other DayCred (Retail) Payroll Auto Asset Management Investments 18
Our Products: Focus on middle market Total Credit Portfolio - R$ MM Middle Market kept as most important product of Daycoval s total portfolio and will be the focus of the Bank during 2009 In the retail operations, focus will be payroll due to the best relation risk and return 3,476 Credit Portfolio Breakdown December/08 Middle Market + Trade Finance Payroll Vehicles 3,880 4,494 4,627 22% 22% 56% 3,981 4Q07 1Q08 2Q08 3Q08 4Q08 19
Our Product: Middle Market Middle Market Portfolio R$ MM The Bank plays in the Low Middle Market : companies with revenues between R$8 and R$300 million Operations with pulverized tickets: 91% of the clients with tickets less than R$5 million Recognized expertise in this segment: best middle market Bank in the last 3 years Middle Market Breakdown December/08 Middle Market Trade Finance 2,495 2,567 239 268 2.901 2.813 277 201 2,299 2,624 2,612 2,256 Average Ticket Middle Market Dec/08 2.230 196 2,034 4Q07 1Q08 2Q08 3Q08 4Q08 9% 9% 7% 2% Final Balance R$ Per Volume Per Clients < 500,000 6.9% 62.7% 500,000 to 1 million 8.7% 13.4% 27% 46% 1 to 3 million 22.6% 14.5% 3 to 5 million 13.1% 3.8% 20 Working Capital Trade Finance Resolution 2770 Cash Account Discount Trade Notes Other 5 to 10 million 24.0% 4.0% > 10 million 24.7% 1.6% Total 100.0%
Our Products: Middle Market Shorter average terms: 160 days with trend of reduction Middle Market Concentration Dec/08 32% Diversification in the clients base: more than 2,000 active clients Low sector exposure: there is no segment representing more than 10% of the portfolio 11% 18% Focus on guarantees: highlight of receivables with more liquidity Top 10 Top 20 Top 50 Sector Distribution - Middle Market Dec/08 Mix of Guarantees - Middle Market Dec/08 16% 34% 10% 40% 6% 4% 4% 10% 22% 54% 21 Industry Services Commerce Other Receivables Vehicles + Real Estate Agricultural Products Equipaments + Foreign Goods Financial Investments Other
Our Products: Payroll Payroll Portfolio - R$ MM Main segment is the INSS: 34% of the total portfolio Lower risk and adequate return: 98% of the portfolio are in the public sector Average term in line with the funding structure: duration of the portfolio 22 months Portfolio has approximately 246,000 clients and average ticket of R$3,600 822 946 892 665 438 4Q07 1Q08 2Q08 3Q08 4Q08 Payroll Breakdown Dec/08 Average ticket R$ 000 10% 2% 1% INSS 14% Federal Government 18% 21% 34% Army Law Courts and Legislative Bodies Municipalities Private Other 3.7 3.6 3Q08 4Q08 22
Our Products: Payroll Payroll Production - R$ MM Payroll Production Breakdown Dec/08 201 174 202 183 68 6% 2% 11% 3% 14% 12% 52% INSS Federal Government Army Law Courts and Legislative Bodies Municipalities Private Other 4Q07 1Q08 2Q08 3Q08 4Q08 Average Term Adjusted by Risk Months 23 22 3Q08 4Q08 23
Our Products: Auto Auto Portfolio - R$ MM Main product is small vehicles: 67% of total portfolio are small vehicles Reduction of production: R$20 million during 4Q08 reflecting the new strategy after the crisis High liquidity: 94% of the expected payments were received Average term of 17 months and average ticket of R$9,000 822 946 892 665 438 4Q07 1Q08 2Q08 3Q08 4Q08 Auto Breakdown Dec/08 Liquidity of Auto Loans Portfolio - Aug-06 to Sep/08 R$ MM % % Acumm. PMT s received in advance 118.1 35.0% 35.0% PMT s received on date of maturity 75.5 22.0% 57.0% PMT s received with delay of 30 days 89.2 26.0% 83.0% PMT s received with delay of 60 to 120 days 31.7 10.0% 93.0% PMT s received with delay over 120 days 3.4 1.0% 94.0% PMT s overdue 20.0 6.0% 100.0% Liquidity of the Auto Loans Portfolio 317.9 94.0% 19% 14% 67% Outstanding PMT s Total Amount 337.9 100.0% Small Vehicles Heavy-duty Vehicles Motorcycles 24
Our Products: Auto Auto Production - R$ MM Auto Production Breakdown Dec/08 222 257 204 184 9% 20 62% 30% 4Q07 1Q08 2Q08 3Q08 4Q08 Small Vehicles Heavy-duty Vehicles Motorcycles Average Term Adjusted by Risk Months 18 17 3Q08 4Q08 25
AGENDA About Banco Daycoval Our Business Model and the Crisis Investment Agreement Capital Structure and Funding Our Products Results Corp. Governance, Shareholders and DAYC4 Shares Annexes 26
Profitability: Improve in net interest margin Recurring Net Income - R$ Million 4Q08 Non-recurring effects (net impact): 60.7 59.7 12.6 47.1 non-recurring 36.7 16.3 20.4 Negative: R$ 13.6 million refers to exchange rate variation on foreign currency exposure Negative: R$ 4.5 million refers to extraordinary increase of non-operational expenses due to the expenses of provisions on amount of assets not for own use Positive: R$ 8.4 million refers to revenues from credit assignments 4Q07 3Q08 4Q08 Negative: R$ 6.6 million due to advances of expenses from operational agreements with promoters Recurring ROAE - % Net Interest Margin (NIM) - % 17.1 15.6 3.4 non-recurring 9.4 12.7 9.8 11.4 12.2 4.3 5.1 27 4Q07 3Q08 4Q08 4Q07 3Q08 4Q08
Quality of Loan Portfolio (1) : Increase in coverage of the past due loans > 60 days Balance and Establishment of Provision- R$ Million 149 183 Establishment of Provision - R$ MM 4Q08 3Q08 Change 52 3Q08 Balance of Provision 68 4Q08 Establishment of Provision Middle Market + Trade Finance 44.6 29.0 15.6 Payroll 4.6 7.4 (2.8) Auto Loans 18.5 15.2 3.3 Total 67.7 51.6 16.1 LLP / Past due operations > 60 days 129% 144% Past due operations > 60 days - R$ MM 4Q08 3Q08 Change 116 127 Middle Market + Trade Finance 104.9 98.9 6.0 Payroll 4.8 4.0 0.8 Auto Loans 17.4 12.6 4.8 Total 127.1 115.5 11.6 28 3Q08 Past due operations 4Q08 LLP / Past due operations (1) Unconsolidated: excludes FIDCs and Credit assignments
Quality of Loan Portfolio: Growth of provisions due to aggressive policy adopted by the Bank Total Provisions 4Q08 Total Loan Portfolio (excludes FIDCs) 4Q08 Portfolio R$ Provision % MM R$ MM AA - H 3,466.0 92.6% 183.3 Credit Assignments 275.3 7.4% 2.0 Total 3,741.3 100.0% 185.3 Middle Market + Trade Finance + Other Portfolio Provision 4Q08 % R$ MM R$ MM Total 2,164.2 100.0% 113.0 Total Provisons / Portfolio 5.2% Total Provisions / Portfolio Risk (excludes FIDCs) 4Q08 D - H 7% AA - C 93% 5.0% Payroll 4Q08 Portfolio Provisions % R$ MM R$ MM AA - H 707.2 82.4% 20.7 Credit Assignments 151.2 17.6% 0.8 Total 858.4 100.0% 21.5 Total Provisions / Portfolio 2.5% Auto Loans 4Q08 Portfolio R$ Provisions R$ % MM MM AA - H 594.6 82.7% 49.6 Credit Assignments 124.1 17.3% 1.2 Total 718.7 100.0% 50.8 Total Provisions / Portfolio 7.1% 29
Efficiency Ratio: Focus on expenses control 4Q08 3Q08 Chg. % 4Q07 Chg. % Personnel Expenses (18.9) (18.3) 3.3% (16.5) 14.5% Other Administrative Expenses (18.7) (17.4) 7.5% (15.2) 23.0% Subtotal (37.6) (35.7) 5.3% (31.7) 18.6% Comission Expenses (total) (17.8) (23.3) -23.6% (12.5) 42.4% Payroll (1) (10.0) (11.9) -16.0% (7.5) 33.3% Auto Loans (2) (7.8) (11.4) -31.6% (5.0) 56.0% Total (55.4) (59.0) -6.1% (44.2) 25.3% (1) In 4Q08 excludes R$ 10.8 million in expenses incurred for advance of commission relating to operational agreements with promoters. (2) In 3Q08 excludes R$5.9 million in expenses incurred for advance appropriation of commissions relating to the assignment of Auto Loan FIDC. Efficiency Ratio - % 26.3 32.0 36.3 (*) In 3Q08 excludes R$5.9 million in expenses incurred for advance appropriation of commissions relating to the assignment of Auto Loan FIDC. 4Q07 3Q08 (*) 4Q08 30
Historical Results Recurring Net Income - (R$ Million) Recurring ROAE - % 231.0 237.0 20.6% 24.2% 24.9% 23.2% 70.1 81.5 101.0 14.9% 2004 2005 2006 2007 2008 2004 2005 2006 2007 2008 Net Interest Margin (NIM) - % Efficiency Ratio - % 14.2% 13.1% 13.3% 12.4% 10.6% 26.8% 37.0% 27.3% 23.1% 33.0% 2004 2005 2006 2007 2008 2004 2005 2006 2007 2008 31
Historical Results Total Assets - (R$ Billion) Shareholders Equity (R$ Million) 6,6 6,8 1,517.5 1,607.2 1,2 2,2 3,1 334.4 365.7 437.8 2004 2005 2006 2007 2008 2004 2005 2006 2007 2008 Basel Index - % 27.2% 25.1% 20.4% 35.8% 28.2% 2004 2005 2006 2007 2008 32
Historical Results Total Funding - (R$ Million) Total Credit Portfolio (R$ Million) 2,977 3,273 3,476 3,981 246 498 754 1,226 1,868 335 465 652 981 1,639 2002 2003 2004 2005 2006 2007 2008 2002 2003 2004 2005 2006 2007 2008 Provisions and NPLs (unconsolidated) - % NPL(*) as % of Total Loan Portfolio Provision as % of total Loan Portfolio 6.0% 5.0% 6.9% 1.5% 1.1% 3.6% 2.9% 3.0% 2.9% 2.7% 3.0% 2.6% 2.7% 2.2% 33 2002 2003 2004 2005 2006 2007 2008 (*) Rating (D H according Bacen rule 2682) = past due over 60 days
AGENDA About Banco Daycoval Our Business Model and the Crisis Investment Agreement Capital Structure and Funding Our Products Results Corp. Governance, Shareholders and DAYC4 Shares Annexes 34
High Standards of Corporate Governance Board of Directors 2 independents Executive Directors 100% Tag Along (PN Shares) Ethic and Conduct Manual Investor Relations Dividends Stock Options Audit Committee (under implementation) 35
Shareholders and DAYC4 Shares Capital Structure December/08 DAYC4 Shares 64.0% 27.7% 7.2% December 31. 2008 Preferred Shares (million) 61,647 Share Price (DAYC4) (R$/share) 5.30 1.2% Daycoval Holding Financeira S.A. Free-float Controlling Shareholders (Family Dayan) Treasury Avg. Daily Traded Vol. 4Q08 (R$ million) 1.38 Market Capitalization (R$ billion) 1.18 Total Shares: 220.0 million shares Treasury Stocks Buyback Program: 2.6 million shares Free-Float: 61.6 million shares First middle market bank to implement a ADR Level I Program 36 Coverage by research analysts from 12 local and international brokerage firms
Investor Relations Phone: +55 (11) 3138.1024/1025 ri@daycoval.com.br http/ri.daycoval.com.br Regarding the Investment Agreement: The rights to subscribe for common and preferred shares (the "Warrants") of Banco Daycoval S.A. ( Daycoval ), any common and preferred shares of Daycoval issuable as a result of the exercise of such Warrants, the preemptive rights to subscribe for Warrants, as well as any bank deposit certificates issued by Daycoval in connection with such Warrants (collectively, the Securities ) have not been and will not be registered under the United States Securities Act of 1933, as amended, or any other U.S. federal and state securities laws (the Rules ), and may not be offered, sold, pledged or otherwise transferred in the United States or to U.S. investors, unless they are registered, or exempt from, or not subject to, registration under the Rules. Regarding the Investment Agreement: The information herein does not constitute an offer of securities and Daycoval is not soliciting offers to buy any of the Securities in the United Sates. This information may not be taken transmitted into the United States or divulged, distributed or disseminated in the United States. Any failure to comply this restriction may constitute a violation of the Rules. The distribution of this document in other jurisdictions may also be restricted by law, and persons who have access to this document should be aware of and comply with any such restrictions. This report may include estimates and forward-looking statements. These estimates and forward-looking statements are to a large extent based on current expectations and projections about future events and financial trends that affect or may come to affect our business. Many important factors may adversely affect the results of Banco Daycoval as described in our estimates and forward-looking statements. These factors include, but are not limited to, the following: the Brazilian and international economic conjunctures, fiscal, foreign-exchange and monetary policies, higher competition in the middle-market segment, the ability of Banco Daycoval to obtain funding for its operations, and amendments to Central Bank regulations. The words believe, may, could, seek, estimate, continued, anticipate, plan, expect and other similar words have the objective of identifying estimates and projections. The considerations involving estimates and forward-looking statements include information related to results and projections, strategies, competitive positioning, the environment in the industry, growth opportunities, the effects of future regulations, and the impacts from competitors. Said estimates and projections refer only to the date on which they were expressed, and we do not assume any obligation to publicly update or revise any of these estimates arising from the occurrence of new information, future events, or any other factors. In view of the risks and uncertainties described above, the estimates and forward-looking statements contained herein may not materialize. Given these limitations, shareholders and investors should not make any decisions based on the estimates, projections and forward-looking statements contained in this report. 37
AGENDA About Banco Daycoval Business Model Investment Agreement Capital Structure and Funding Our Products Results Corp. Governance, Shareholders and DAYC4 Shares Annexes 38
Breakdown of the Middle Market Credit Portfolio by Sectors Serasa December 2008 COMMERCE 16.0% INDUSTRY 40.5% Vehicles dealership 0.8% Ind. and processing of ethanol 9.3% Whosale trade of food and cereals 1.3% Industry of autoparties and acessories 1.2% Export and import of soybeans 0.6% Industry of flooring and tiles 1.0% Commerce of agricultural products 0.8% Industry of clothes 1.1% Other 12.5% Industry of cement 0.9% Industry of fertilizers 1.0% Other 26.0% SERVICES 33.9% Holding 4.7% Transports 3.3% FINANCIAL 5.0% Cooperative 2.1% Education 1.6% PRIMARY 1.2% Real Estate 1.6% Consultancy 1.8% INDIVIDUALS 2.1% Energy distribution 1.7% Other 17.1% THIRD SECTOR 1.5% 39
Middle Market: Assets Geographic Distribution December 2008 São Paulo 47.0% Espirito Santo 3.0% Mato Grosso 5.9% Bahia 2.8% Paraná 5.4% Ceará 2.3% Minas Gerais 4.8% Alagoas 2.1% Pernambuco 4.7% Distrito Federal 1.3% Rio de Janeiro 4.0% Pará 0.8% Rio Grande do Sul 4.0% Sergipe 0.3% Amazonas 3.9% Marranhão 0.2% Goiás 3.8% Paraíba 0.1% Santa Catarina 3.6% Other States 0.2% 40
Brazilian Credit Scenario Brazilian Credit Evolution R$ Billion Credit over PIB % 1,110 1,153 1,185 1,208 1,227 1,230 36.6% 32.0% 28.8% 26.4% 24.7% 22.0% 28.0% 30.7% 34.8% 41.3% Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 1994 1995 1996 2000 2001 2002 2005 2006 2007 2008 Corporate loans with volume up to R$ 10 million R$ Bi 357.4 367.9 380.3 384.7 390.4 395.9 Credit to Companies by Size December/08 Up to R$ 100,000 16.6% 71,3% 71,1% 71,2% 71,0% 70,7% 70,8% R$ 115 bi 28,7% 28,9% 28,8% 29,0% 29,3% 29,2% Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Over R$ 10 million 43.1% R$ 300 bi R$ 281 bi From R$100,000 to R$10 million 40.3% Up to R$ 100,000 41 From R$ 100,000 to R$ 10 million Source: Brazilian Central Bank
Balance Sheet Assets 4Q08 3Q08 4Q07 Current Assets 5,219,130 6,092,436 4,980,703 Cash and Cash Equivalents 45,785 62,259 49,589 Interbank Investments 1,801,367 2,299,291 1,994,360 Securities and Derivatives 633,285 423,431 164,394 Interbank Accounts 12,901 20,683 73,816 Lending Operations 2,371,330 2,975,255 2,422,579 Other Receivables 293,886 230,763 218,193 Other Assets 60,576 80,754 57,772 Long-Term Assets 1,598,789 1,978,533 1,562,919 Securities & Derivative Financial Instruments 333,312 410,139 585,440 Lending Operations 1,027,877 1,344,233 809,760 Other Receivables 182,980 158,395 109,519 Other Assets 54,620 65,766 58,200 Permanent 13,064 13,537 13,026 Investments 356 356 514 Property and Equipment in Use 12,597 13,065 12,357 Intangible 111 116 155 Total Assets 6,830,983 8,084,506 6,556,648 Amounts in R$ 000 42 Liabilities 4Q08 3Q08 4Q07 Current Liabilities 3,435,684 4,425,036 3,926,264 Deposits 1,258,451 1,981,040 1,834,198 Money Market Funding 1,290,642 1,876,915 1,514,396 Funds from Acceptance and Issuance of Securities 285,134 16,293 3,277 Interbank Accounts 494 1,995 1,341 Interbranch Accounts 2,665 4,238 15,028 Borrowings and Onlendings 369,635 363,794 344,274 Derivatives 19,044 14,972 2,567 Provisions of Insurance 2,521 3,145 - Other payables 207,098 162,644 211,183 Long-term Liabilities 1,780,005 2,036,198 1,101,033 Deposits 498,518 736,601 497,660 Resources from Acceptance and Securities Issued 500,361 646,969 211,316 Borrowings and Onlendings 511,858 421,481 220,844 Derivatives 1,085 2,173 133 Other Payables 268,183 228,974 171,080 Deferred Income 7,558 10,668 11,394 Minority Interest 508 497 464 Shareholders Equity 1,607,228 1,612,107 1,517,493 Capital of Brazilian Residents 1,359,143 1,359,143 1,359,143 Capital reserves 170 170 54 Revaluation Reserves 1,991 1,969 2,071 Profit Reserves 267,717 268,818 160,838 Adjustment to Fair Value - Securities and Derivatives (4,919) (9,687) (4,613) ( - ) Treasury Stocks (16,874) (8,306) - Total Liabilities 6,830,983 8,084,506 6,556,648
Quarterly Income Statement 4Q08 3Q08 Chg. % 4Q07 Chg. % Income from Financial Intermediation 569,552 534,211 6.6% 242,102 135.3% Lending Operation 311,240 312,150-0.3% 187,970 65.6% Securities Operations 63,261 70,248-9.9% 54,732 15.6% Derivatives 152,154 107,819 41.1% (10,306) n.a. Foreign Exchange Operations 42,897 40,642 5.5% 8,604 n.a. Compulsory Investments - 3,352 n.a. 1,102 n.a. Expenses of Financial Intermediation (460,847) (415,436) 10.9% (120,016) n.a. Funding Expenses (281,794) (258,250) 9.1% (84,797) n.a. Borrowing and Onlendings (111,391) (105,602) 5.5% (8,038) n.a. Loan Losses Provisions (67,662) (51,584) 31.2% (27,181) 148.9% Gross Profit from Financial Intermediation 108,705 118,775-8.5% 122,086-11.0% Other Operating Income (Expenses) (66,764) (58,892) 13.4% (38,925) 71.5% Income from Services Provided 4,332 11,458-62.2% 3,932 10.2% Personnel Expenses (18,929) (18,280) 3.6% (16,475) 14.9% Other Administrative Expenses (47,326) (46,600) 1.6% (27,704) 70.8% Tax Expenses (5,943) (7,150) -16.9% (8,526) -30.3% Other Operating Income 9,597 7,182 33.6% 14,954-35.8% Other Operating Expenses (8,495) (5,502) 54.4% (5,106) 66.4% Income from Operation 41,941 59,883-30.0% 83,161-49.6% Non-operating Expenses (13,521) (763) n.a. (90) n.a. Income before Taxes and Minority Interest 28,420 59,120-51.9% 83,071-65.8% Income and Social Contribution Taxes 2,005 (11,974) n.a. (8,450) n.a. Provision for Income Tax 692 (20,703) n.a. (7,447) -109.3% Provision for Social Contribution Tax (1,399) (12,847) -89.1% (2,401) -41.7% Deferred Taxes 2,712 21,576-87.4% 1,398 94.0% Profit-Sharing (10,043) - n.a. (12,454) -19.4% Minority Interest (11) (11) - (4) 175.0% Net Income 20,371 47,135-56.8% 62,163-67.2% Interest on Shareholders Equity (21,472) (24,711) -13.1% (42,425) -49.4% Earnings per Share (R$) 0.09 0.21-56.4% 0.28-66.8% Amounts in R$ 000 43 Number of Shares 220,018,112 221,863,412-0.8% 222,633,512-1.2%
Annual Income Statement 2008 2007 Chg. % Amounts in R$ 000 Income from Financial Intermediation 1,650,443 775,622 112.8% Lending Operation 1,073,824 617,512 73.9% Securities Operations 267,249 205,240 30.2% Derivatives 219,074 (68,202) n.a. Foreign Exchange Operations 82,765 18,511 n.a. Compulsory Investments 7,531 2,561 194.1% Expenses of Financial Intermediation (1,181,738) (385,373) 206.6% Funding Expenses (762,088) (300,962) 153.2% Borrowing and Onlendings (242,827) (23,560) n.a. Loan Losses Provisions (176,823) (60,851) 190.6% Gross Profit from Financial Intermediation 468,705 390,249 20.1% Other Operating Income (Expenses) (191,951) (117,466) 63.4% Income from Services Provided 26,190 13,470 94.4% Personnel Expenses (70,995) (52,762) 34.6% Other Administrative Expenses (172,646) (110,072) 56.8% Tax Expenses (32,899) (28,508) 15.4% Other Operating Income 94,425 78,756 19.9% Other Operating Expenses (36,026) (18,350) 96.3% Income from Operation 276,754 272,783 1.5% Non-operating Expenses (14,904) (581) n.a. Income before Taxes and Minority Interest 261,850 272,202-3.8% Income and Social Contribution Taxes (44,115) (51,666) -14.6% Provision for Income Tax (66,389) (62,376) 6.4% Provision for Social Contribution Tax (33,140) (20,754) 59.7% Deferred Taxes 55,414 31,464 76.1% Profit-Sharing (17,541) (14,511) 20.9% Minority Interest (44) (8) n.a. Net Income 200,150 206,017-2.8% Interest on Shareholders Equity (93,416) (55,791) n.a. Earnings per Share (R$) 0.91 0.93-1.7% 44 Number of Shares 220,018,112 222,633,512-1.2%